NZ dollar heads for 1.2 percent weekly decline

April 4 (BusinessDesk) - The New Zealand dollar is
heading for a 1.2 percent weekly decline after falling dairy
prices stoked concerns about the strength of the local
recovery, and as investors wait for US jobs figures which
are expected to show the world’s biggest economy is
improving.

The kiwi fell to 85.58 US cents at 5pm in
Wellington from 86.58 cents at the New York close last
Friday. It increased from 85.38 cents at 8am and 85.43 cents
yesterday. The trade-weighted index rose to 80.12 from 79.94
yesterday, and is heading for a 0.9 percent weekly fall from
80.85 at last week’s close.

The local currency fell out
of favour on Wednesday when dairy prices fell at Fonterra
Cooperative Group’s latest online auction to their lowest
level in almost a year, taking the sheen off New Zealand’s
strong economic outlook. Meantime, investors will get
another update on the US economy when the government
non-farm payrolls report is released on Friday in
Washington, which is seen as a gauge of how quickly the
Federal Reserve will start moving to normal monetary policy
settings.

“The kiwi was as strong as 10 men, now it’s
had its big rally and the final straw to break the camel’s
back was the Fonterra announcement,” said Michael
Johnston, senior dealer at HiFX in Auckland. “The
short-term focus is most squarely on the US non-farms, and
the kiwi will stay in a tight range until then.”

If the
US jobs number comes in better than expected, the kiwi will
probably extend its decline, though if it disappoints the
local currency may gain, HiFX’s Johnston said.

The
local currency rose to 62.41 euro cents at 5pm in Wellington
from 62.09 cents yesterday after the European Central Bank
said it was ready to take further action to see off the
threat of deflation, including the use of quantitative
easing, lower rates or a negative deposit rate.

The kiwi
traded at 92.61 Australian cents from 92.66 cents yesterday,
and increased to 88.91 yen from 88.81 yen. It advanced to
51.59 British pence from 51.34 pence yesterday.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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